Nefret Stores is a large discount cosmetic department store chain.
The company has recently expanded from 5 to 15 stores by borrowing from several large
Financial institutions and from a public offering of common stock. A recent investigation
Has disclosed that Nefret materially overstated net income. The company understated their
Accounts payable and recorded fictitious supplier credits that further reduced accounts
Payable. As a result, an Income & Sales Tax Department investigation was critical of the
Evidence gathered by Nefret’s audit firm, Abdul & El-Emir , in testing accounts payable
And the supplier credits.